Traditionally daily fantasy sports has been dominated by business-to-customer (B2C) providers like DraftKings and FanDuel. Together, these companies control 97 percent of the $3.26 billion DFS industry. Indeed, there was a planned merger between the two industry giants last year but it never took place. The past 12 months have brought significant problems for both companies and a rising star is positioning to take their place.
The market has changed dramatically in the last year. According to Forbes, the search traffic for “daily fantasy sports” declined year-on-year in 2017. The cost of acquiring customers has also dramatically increased. In fact, DraftKings and FanDuel routinely spend up to five times a customer’s value on advertising. Low retention rates and high costs are rapidly making the old model unsustainable.
A turnkey solution
If the DFS industry is to continue to thrive, a new approach is needed. This is where Global Daily Fantasy Sports, Inc. ( TSX-V: DFS) has seen an opportunity to turn the market on its head. GDFS is the first global network for DFS. They offer a turnkey solution for online gaming and gambling providers that lets their users tap into league games and compete with players around the world.
Unlike FanDuel or DraftKings, Global Daily Fantasy Sports does not have to spend thousands of dollars acquiring customers. Instead, they can tap into the existing customer base of thousands of e-gaming providers around the globe. They also allow these providers to ensure that their players always have someone to compete with. When a provider uses the GDFS platform, their own players can be up against anybody else using the network, regardless of which provider they are using.
Key deals open path to market dominance
One of GDFS’ most significant achievements was the landmark deal with Nyx Gaming Group. This deal has given GDFS access to over 140 gaming sites and 220 open bet sportsbooks. GDFS also acquired their principal rival Mondogoal.com in 2017. These deals, combined with GDFS’ agreements with Lottomatica and Sisal, give the company guaranteed access to over 30 million users, at zero net acquisition costs. This puts DraftKings’ and FanDuel’s combined 10 million users to shame.
Lottomatica deals with sports betting, lottery, and public games while Sisal is focused on sports betting in Italy. Both of them have a percent share of the market. Microgame has 200,000 daily users and closes to 25,000 betting shops. GDFS will initially offer English Premier League, La Liga, Bundesliga, Ligue 1 and Serie A, as well as PGA Tour and the European Tour—in addition to operating the first DFS World Cup service.
Operator- and user-friendly
The key driver behind Global DFS’ success is that its platform is simple for both operators and users. It allows any e-gaming company, from online poker to bingo sites, to offer Daily Fantasy Sports tournaments for their users. It also ensures that players will always have someone to compete with by pooling together all of their userbases, without compromising security or privacy.
This pooled user base also helps to ensure the liquidity of the system. By having a large pool of users, GDFS can ensure that there are always enough users to fill out a prize pool. In comparison, every year, FanDuel and DraftKings have to shell out $200-300 million every NFL season just to keep players and keep the system liquid.
In providing a unique B2B white-label platform Global Daily Fantasy Sports, Inc. (TSX-V: DFS) is uniquely well placed to dominate the daily fantasy sports argument as existing industry giants flounder in the face of new challenges.